Our newly expanded Europe, Middle East & Africa Quarterly (EMEAQ) provides comprehensive analysis of the EMEA region, examining key topics in depth and providing a detailed guide to regional supply, demand, trade flows and downstream capacity. By adding Europe to the MEAQ publication, we hope to provide a more complete picture of the inter-connectedness of the EMEA region in terms of crude and product flows, investment and geopolitical impacts. We welcome any feedback on this change or other potential improvements. Each quarter, Focus pieces delve into key issues that will impact the market in the near and medium term.
In this edition:
- In Focus: The rapid rebalancing of the oil market is making it more vulnerable to supply shocks, including in the Middle East where the near-total rollback of the self-titled Islamic State, rather than delivering stability, is allowing older conflicts and tensions to reassert themselves just as a more assertive Saudi Arabia emerges.
- In Focus: While the debate around the impact on both fuel oil and diesel balances in the aftermath of IMO 2020 is still raging, European refiners have been busily chipping away at their fuel oil yields. Europe and the FSU will still have excess high-sulphur fuel oil to dispose of come 1 January 2020, so simple refineries are likely to have to cut runs or close, but complex refiners will be licking their lips as the deadline approaches.
- Macroeconomic outlook: European oil product demand has surprised to the upside for the past three years and while gasoline demand growth may slow in H2 18 if prices rise sharply, industrial demand will hold up given the bright macroeconomic backdrop. So diesel demand looks set for another year of strong growth.
- Outlook for oil products: Turkey’s diesel short has risen steadily in recent years despite the 2015 upgrade of the 0.22 mb/d Izmit refinery. The 0.21 mb/d STAR refinery—likely to be commissioned in Q1 19—will add 0.10 mb/d of diesel capacity once fully operational, but with demand expected to continue growing, Turkey will remain a significant importer of diesel and the net short will creep higher again from 2020.
- Outlook for crude: There is broad consensus that low-sulphur crudes will be in high demand as refiners aim to sweeten their crude diets to comply with the new IMO regulations, and West Africa is well placed to serve this demand. But African production is likely to be flat y/y at best in 2018 (with downside risks to both Libya and Nigeria) and fall thereafter due to a lack of new project start-ups. Worse, the addition of the 0.65 mb/d Dangote refinery in Nigeria, which will likely process domestic lights, will reduce exports from the country by 14 cargoes a month from end-2021.
The Europe, Middle East & Africa Quarterly also provides a unique and comprehensive overview of key regional data, focusing on: demand, refining, supply, trade flows and prices, including domestic consumption by country and by oil product for key European, Middle Eastern and African countries; refining capacity and upcoming projects by country, and refined products output; and crude output by country, with a detailed focus on the largest regional oil sector. We now also publish detailed analysis on Sub-Saharan African markets, given their growing importance in determining global product flows.